As a firm increases the amount of debt it uses to fund its assets the:Select one:a.WACC will continually decline.b.WACC will continually increase.c.cost of debt can be expected to rise.d.WACC will be unaffected.Clear my choice

If a firm increases the proportion of debt in the capital structure:A.The cost of debt will increase but there will be no impact on the cost of equity.B.The cost of equity and the cost of debt will both increase, but its cost of capital will fall.C.The cost of equity will increase, but the impact on the firm’s cost of capital is unclear in the absence of specific information about financial distress costs and the firm’s tax position.D.The cost of equity will increase but the cost of debt will decrease.

In case the firm is all-equity financed, WACC would be equal to:Options :Cost of debtCost of equityNeither A nor BBoth A and B

Firm value initially increases when the proportion of debt in the capital structure increases due to the Blank______.Multiple choice question.lower dividend paymentsdebt tax shieldhigher dividend paymentslower interest expenses

Select all that applyWhat are some possible consequences of raising debt to fool the market about a firm's value?Multiple select question.When the market discovers the truth, share prices will drop.The probability and expected costs of financial distress will decrease if debt rises above the optimal level.When the market discovers the truth, share prices will increase.The probability and expected costs of financial distress will increase if debt rises above the optimal level.

Which of the following contributes to increasing debt capacity after a merger?Multiple select question.the target firm has a low debt levelrisk-averse managementthe target firm has a high debt levela merger can decrease the debt risk level